In August of 2018, CREC and Rincon Partners (Rincon) formed a joint venture to purchase Avenel on 16th, a 200-unit apartment community located in Midtown Phoenix, Arizona. The property was constructed in two phases, with the initial phase completed in 1981 and phase two in 1984. The previous owner allowed the property to fall into disrepair, sacrificing rental rate for occupancy.
With a budget of $4.2MM ($20,800 per unit), CREC and Rincon completed a multitude of updates to impact the overall resident experience. In addition to addressing the deferred maintenance and completely renovating the unit interiors, CREC and Rincon refreshed the pool area, renovated the leasing center to a more modern and functional space and completely replaced the landscaping. The second pool had substantially deteriorated, and it was converted to a green space that included outdoor seating with a fire-pit and a kitchen area. The unit renovations included kitchen updates, new flooring throughout, new plumbing, electrical fixtures and a new appliance package. The remainder of the capital expenditure budget was dedicated toward deferred maintenance such as roof replacement, exterior painting, elevated walkway repair, new HVAC systems, carport replacement and asphalt repairs.
The business plan also focused on improving property management by decreasing operating expenses and implementing a RUBS (utility reimbursement) plan that had not been utilized by the previous owner. Within twelve months of acquisition, and ahead of the proforma schedule, 147 of the 200 units were renovated and turned over to property management, and of those 147 units, 98% were leased. Asking rents were 6.1% higher than the proforma, due in large part to the success of the property renovations. The decision was made to discontinue renovations and leave the balance of the units unrenovated to provide the future buyer with an opportunity to implement its own value-add program. CREC sold Avenel on 16th in an opportunistic sale in August of 2020.
- Asset Location: Midtown Phoenix, AZ
- 200-unit multifamily apartment community
- Investment Date: August 2018
- CREC Total Investment: $4.1 Million
- Investment Type: Multifamily acquisition
- JV Partner: Rincon Partners (“Rincon”)